DOL rolls back joint employer rule, giving employers some clarity

Dive Brief:

The DOL officially withdrew its Administrator's Interpretations, a form of informal guidance, on joint employment and independent contractors, the agency announced in a release.
The removal "does not change the legal responsibilities of employers under the Fair Labor Standards Act," the DOL stated. But various legal experts told HR Dive that the move signals that the DOL will relax its approach to classification rules.
Notably, the NLRB's stance on joint employment remains unchanged, meaning employers still aren't entirely off the hook. The NLRB established the original changes to joint employer rules through its decision in the Browning-Ferris case, which is still moving through the courts.

Dive Insight:

By providing clarity, the DOL has helped employers who are increasingly turning to contract work to make up talent shortages but are worried about the potential compliance burden of joint employment.

"This is the first major sign that the Trump DOL intends to 'undo' some of the overstepping and activism of the prior administration," Allan Bloom, partner at Proskauer Rose LLP, said in an email.

The Obama-era interpretation on joint employment was seen as the DOL cracking down on employee misclassification, though critics claimed the guidance did not include consideration for the way employers actually used contractors when meeting talent needs. The new guidance eases some of that concern, John Alan Doran, partner at Sherman Howard, said in an email.

However, uncertainty still reigns for many employers, especially since the NLRB's guidance is still in effect. Courts, also, are not bound by this new interpretation of the rule, which may cause issues for employers as Browning-Ferris makes its way through the courts.

"If anything, the enforcement landscape is fracturing between state and local levels and the courts, forcing multistate employers to deal with multiple and sometimes inconsistent enforcement regimes. A decreased enforcement priority at the federal level may turn out to be a trap for unwary employers," Aaron Goldstein, labor and employment partner at Dorsey & Whitney, said in an email.

As always, employers are still bound by wage and hour law — meaning they could still be at risk for lawsuits from contractors claiming to be employees, as has been seen with Uber's model thus far.